PARIS: Telecom-equipment maker Alcatel-Lucent is to cut 10,000 jobs worldwide to reduce costs by 15 percent within two years and focus on new technologies, it announced yesterday.
Unions greeted the news with dismay, slamming the so-called “Shift” plan as “violent” for France — where some 900 employees will lose their jobs —and Industrial Renewal Minister Arnaud Montebourg asked the company to scale back the cuts in the country.
The French-US firm has lurched from crisis to false dawn to crisis since it was formed by a 2006 merger, and is restructuring and refocusing its activities to reverse losses.
Chief executive officer Michel Combes, who informed the company’s European works council of the Shift plan, said it was time for tough measures.
“We launched the Shift plan in June to give Alcatel-Lucent an industrially sustainable future,” he said. “To carry out this plan we must make difficult decisions ... The Shift Plan is about the company regaining control of its destiny,” he said in a statement. The cuts represent about a seventh of the company’s global work force of 72,000.
Alcatel-Lucent said 4,100 jobs would be cut in Europe, the Middle East and Africa by 2015, 3,800 in the Asia Pacific region, and 2,100 in North and South America. About 900 jobs will be axed in France, and according to French economic newspaper Les Echos, two sites in the cities of Rennes and Toulouse will be closed and plants elsewhere sold.
“By the end of 2015, Alcatel-Lucent will halve the number of its business hubs globally,” the statement said.
One analyst, who declined to be named, commented that the job cuts were “indispensable, even if there is damage to employment, otherwise this company was heading into a wall.”
He said: “This is the last-chance plan. If they don’t succeed this time, it’s the end, but if they manage to carry it through, it’s a company which should succeed in two or three years’ time.” Finnish group Nokia was adopting similar radical measures, he added.
Analysts at Bank of America Merill Lynch, meanwhile, said that “it is a big step in the right direction.” The restructuring could enable Alcatel-Lucent to achieve an adjusted operating margin of 5-10 percent, and generate cash.
Brokers Aurel BGC pointed out that the company was “taking the bull by the horns” but without the support of broad public opinion and of the government, which could mean applying the plan will be difficult.
For Bank of America Merill Lynch, the fact that only 900 of the jobs were being cut in France might facilitate application of the restructuring.
But yesterday, Montebourg told parliament that he had asked Alcatel-Lucent management to scale back the cuts in France, calling them “excessive”.
Prime Minister Jean-Marc Ayrault, meanwhile, said the government would be “particularly vigilant and demanding” about the implementation of the cuts.
Alcatel-Lucent has been facing stiff competition from bigger rivals in Europe and Asia including Ericsson, Nokia and Huawei.
The new plan is aimed at transforming research and development and “reallocating spending to focus on future technologies while making a significant reduction of fixed costs,” the statement said.